We study the effect of mobility on the Japanese labor market outcome during the COVID-19 period.
•
Absent from work increased especially for non-regular, low-educated, females with children.
•
Work hours decreased especially for business owners without employees and those aged 31 to 45.
•
The negative effect on unemployment for those aged 60 and 65.
•
These adverse effects were greater for people working in service and sales occupations.
Abstract
The paper investigates the heterogeneous effect of a policy-induced decline in people’s mobility on the Japanese labor market outcome during the early COVID-19 period. Regressing individual-level labor market outcomes on prefecture-level mobility changes using policy stringency index as an instrument, our two-stage least squares estimator presents the following findings. First, the number of people absent from work increased for all groups of individuals, but the magnitude was greater for workers with non-regular employment status, low-educated people, females especially with children, and those aged 31 to 45 years. Second, while work hours decreased for most groups, the magnitude was especially greater for business owners without employees and those aged 31 to 45. Third, the negative effect on unemployment was statistically significant for older males who worked as regular workers in the previous year. The impact was particularly considerable for those aged 60 and 65, thus suggesting that they lost their re-employment opportunity due to COVID-19. Fourth, all these adverse effects were greater for people working in service and sales occupations. Fifth, a counterfactual experiment of more stringent policies indicates that while an average worker would lose JPY 3857 in weekly earnings by shortening their work hours, the weekly loss for those aged 31 to 45 years and working in service and sales occupations would be about JPY 13,842.
This study is conducted as a part of the research project in the Research Institute of Economy, Trade and Industry. The views expressed in this paper are those of the authors and do not necessarily represent the official views of the Economic and Social Research Institute, the Cabinet Office, the Government of Japan or the institutions the authors are affiliated with. The Labour Force Survey, that support the findings of this study, are available from the Ministry of Internal Affairs and Communication. Restrictions apply to the availability of these study, which were used under license for this study.
